By Paul Blustein
                  Washington Post Staff Writer
                  Wednesday, October 7, 1998; Page C10 

                  The president of the World Bank delivered an impassioned call yesterday
                  for devoting more attention and money to the "human crisis" stemming from
                  the turmoil besetting developing countries, warning that an excessive focus
                  on "sound budgets" and "technocratic fixes" would lead to even more
                  economic instability in the long run.

                  James D. Wolfensohn's remarks, which came in a speech to the annual
                  meeting of the World Bank and its sister institution, the International
                  Monetary Fund, constituted thinly veiled criticism of the IMF. The criticism
                  highlighted a growing rift between the two institutions that stems from the
                  view of many bank staffers, notably chief economist Joseph Stiglitz, that
                  the fund has mishandled the global crisis by requiring financially strapped
                  countries to adopt painful austerity measures.

                  Although "appropriate" economic policies are necessary, Wolfensohn said,
                  "we have learned that when we ask governments to take the painful steps
                  to put their economies in order we can create enormous tension."

                  "When we redress budget imbalances," he continued, "we must recognize
                  that programs to keep children in school may be lost, that programs to
                  ensure health care for the poorest may be lost, that small and medium
                  enterprises, which provide income to their owners and employment to
                  many, may be starved of credit, and fail."

                  The Australian-born Wolfensohn cited "dark, searing images of
                  desperation, hopelessness and decline" that he had seen as a result of the
                  crisis: "The mother in Mindanao [the Philippines], pulling her child out of
                  school, haunted by the fear that he will never return. The family in Korea,
                  with a mid-size scrap metal business, made destitute through lack of credit.
                  The father in Jakarta, paying a money lender three times in interest what he
                  can make that day, falling deeper and deeper into debt."

                  At the core of his argument was a plea that the effort to address the crisis
                  "must go beyond financial stabilization" -- the IMF's prime concern -- to
                  anti-poverty activities of the sort the bank specializes in, to counter an
                  enormous increase in human misery in crisis-stricken countries that
                  threatens to spawn social and political unrest.

                  And he issued his strongest warning yet that the bank's capital shouldn't be
                  overused to help bolster the IMF's multibillion-dollar bailouts, fretting that
                  "there will be less to lend for our long-term development mission."

                  The friction between the fund and the bank has become a source of
                  frustration for the Clinton administration, which fears that a public spat
                  could undermine efforts to resolve the crisis. Some Wolfensohn critics
                  contend that his pique stems from envy of the IMF's crisis management
                  role, which has overshadowed the bank. On Monday, Treasury Secretary
                  Robert E. Rubin admonished the fund and the bank to "put aside
                  institutional rivalries unbefitting public institutions with the same
                  shareholders."

                  In a bow toward harmony, Wolfensohn said he would "like to pay tribute
                  to the work that the fund has done in a year that has been characterized by
                  great turmoil," and he referred to Michel Camdessus, the IMF's managing
                  director, as "my colleague and friend."

                  But in a barbed comment, he warned against letting development needs go
                  unmet, and failing to counter an alarming rise in poverty, while the
                  international community devotes its energies to the creation of a "new
                  architecture" for international finance -- that is, a new system for regulating
                  the vast flows of capital that have both helped and destabilized many
                  countries. This is -- a high priority for both the IMF and the Clinton
                  administration.

                  "We may build a new international financial architecture. But it will be a
                  house built on sand," Wolfensohn declared, if it is done without adequate
                  attention to meeting social needs.

                  Since the global financial crisis erupted in Thailand in July 1997, the bank
                  -- traditionally a lender for projects to promote education, health, nutrition
                  and infrastructure-building -- has made about two-fifths of its loans for
                  crisis-fighting purposes to countries such as South Korea and Indonesia.
                  With the IMF's coffers badly depleted, the United States and other major
                  industrialized countries recently called on the bank to provide even more
                  emergency loans -- and although Wolfensohn has agreed, he made clear
                  yesterday that he has strong reservations.

                  "There are trade-offs that we cannot ignore," he said. "New demands
                  made on us will require a very careful assessment of possible needs for
                  new resources" -- a hint that if the bank is pushed too far it will ask its
                  shareholder countries to provide more capital, which would be politically
                  unpopular on Capitol Hill.

                  Camdessus, who also addressed the IMF-World Bank meetings, used
                  some of his bleakest rhetoric to date in assessing the crisis. "We are
                  speaking not just of countries in crisis, but of a system in crisis, a system
                  not yet sufficiently adapted to the opportunities and risks of globalization,"
                  he said.

                  He acknowledged: "We did not anticipate the strength of this virus, which
                  has struck far and wide -- for instance, attacking Latin America because
                  Russia ran into trouble."